ECON 1012 Lecture Notes - Lecture 4: Real Wages, Output Gap, Unemployment Benefits

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17 Dec 2017

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The loss of a job brings a loss of income and lost production. Lost production means lower consumption and a lower investment in capital, which lowers the living standard in both the present and the future. Prolonged unemployment permanently damages a person"s job prospects by destroying human capital. Three labor market indicators: the census bureau calculates three indicators of the state of the labor market. The percentage of the people in the labor force who are unemployed. Unemployment rate = # of people unemployed/labor force (100) and. Labor force = # of people employed + # of people unemployed: the unemployment rate fluctuates over the business cycle and reaches a peak value after a recession ends, the employment-to-population ratio. The percentage of people of working age who have jobs. Employment to population ratio= # of people employed/working-age population (100) This indicator also fluctuates: it falls during a recession and increases during an expansion: the labor force participation rate.

Related Questions

QUESTION 1

Rosina Gonzales quit her job in Pennsylvania and moved to California to be close to her family. She is currently looking for work, so she would be considered

		frictionally unemployed.
		cyclically unemployed.
		a discouraged worker.
		seasonally unemployed.

1 points

QUESTION 2

Discouraged workers

		are counted as unemployed workers when the unemployment rate is calculated.
		would decrease the unemployment rate if they were added to the number of unemployed workers.
		are counted as one-half of a worker in the unemployment statistics.
		would increase unemployment rate if they were added to the number of unemployed workers.

1 points

QUESTION 3

In measuring the unemployment rate, part-time workers are ________ and discouraged workers are ________.

		included as employed; included as unemployed
		excluded; excluded
		excluded; included as unemployed
		included as employed; excluded

1 points

QUESTION 4

Mary has decided that the she does not like Iowa and has decided to quit her job as a medical technician and move to Arizona. Mary's unemployment as she searches for a new job is best classified as

		frictional.
		cyclical.
		structural.
		seasonal.

1 points

QUESTION 5

When a golf caddy in Minnesota (where golf courses close in the winter) is unemployed in December, it is most likely the case that the golf caddy is

		cyclically unemployed during long droughts.
		frictionally unemployed during spring and summer.
		structurally unemployed during spring and summer.
		seasonally unemployed.

1 points

QUESTION 6

After graduating from college, Yunis, age 22, started working for his parent's real estate business as an unpaid assistant. He works 25 hours a week helping manage rental units . In the Current Population Survey, Yunis is considered

		part of the labor force and employed.
		part of the labor force and unemployed.
		a discouraged worker.
		not part of the labor force.

1 points

QUESTION 7

The working-age population includes

		youngsters between the ages of 14 and 16 if they are working at least part time.
		only employed people over the age of 16.
		those in jails and hospitals.
		employed and unemployed people over the age of 16.

1 points

QUESTION 8

Involuntary part-time workers are workers who

		work less than 35 hours but would like to work full time.
		work more than 35 hours but would like to work less than 35 hours.
		work less than 35 hours by choice.
		work have lost their jobs within the last four weeks and are seeking another job.

1 points

QUESTION 9

Frictional unemployment is the result of

		the normal process of jobs being created and destroyed.
		an economic recession.
		people not getting along (having friction) with their employers.
		the economic decline of major industries

1 points

QUESTION 10

Bill just graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered

		not in the labor force.
		cyclically unemployed.
		frictionally unemployed.
		structurally unemployed.

1 points

QUESTION 11

Harry works at the video rental store for 20 hours per week. He's asked his boss to allow him to work 40 hours per week, but has been told that business is too slow. Harry is considered

		an involuntary part-time worker.
		a marginally attached worker.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 12

Discouraged workers who are over 16 years old are

i.not counted as unemployed.

ii.part of the working-age population.

iii.part of the labor force.

		i and ii
		ii and iii
		ii only
		i only

1 points

QUESTION 13

Higher unemployment benefits create

		higher seasonal unemployment as workers switch jobs.
		a lower number of job leavers.
		incentives for longer job searches and higher frictional unemployment.
		incentives for shorter job searches and higher structural unemployment.

1 points

QUESTION 14

Seasonal unemployment includes people who become unemployed from

		changes in the business cycle.
		technological changes.
		the seasonal weather patterns.
		normal changes in the labor force.

1 points

QUESTION 15

Cyclical unemployment is

		higher when the economy is expanding.
		always greater than the total of structural and frictional unemployment.
		the total of structural and frictional unemployment.
		created by a recession.

1 points

QUESTION 16

Which of the following people would be classified as employed in the Current Population Survey?

		April, who just graduated from college and is looking for work
		Jason, who was laid off from work less than 6 months ago but who has stopped looking for work
		Rich, who is working 20 hours a week but wants a full-time job
		Misty, who just quit her job to return full time to school

1 points

QUESTION 17

People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

		discouraged workers.
		involuntarily unemployed.
		part-time lookers.
		unemployed workers.

1 points

QUESTION 18

Discouraged workers are included in the calculation of the

i.unemployment rate.

ii.labor force participation rate.

iii.working-age population.

		i and ii
		i only
		iii only
		ii only

1 points

QUESTION 19

As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences

		changes in the business cycle.
		cyclical unemployment.
		frictional unemployment.
		structural unemployment.

1 points

QUESTION 20

Suppose the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the labor force participation rate?

		64 percent
		67 percent
		76 percent
		49 percent

1 points

QUESTION 21

During a recession the unemployment rate generally ________ and during an expansion the unemployment rate generally ________.

		rises; rises
		rises; does not change
		falls; rises
		rises; falls

1 points

QUESTION 22

In January of 2001, the population of the United States was 276.8 million, the working-age population was 210.2 million, the total number of people employed was 140, and the total number of people unemployed was 5.0 million. What was the labor force participation rate?

		56 percent
		69 percent
		78 percent
		67 percent

1 points

QUESTION 23

If Brian, age 24, had no job but was available for work and had looked for a job the week before the survey, Brian is classified in the Current Population Survey as

		unemployed.
		employed.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 24

Julie works part-time for economic reasons. She would be considered

		an involuntary part-time worker.
		not in the labor force.
		a job seeker.
		a discouraged worker.

1 points

QUESTION 25

Suppose the population is 300 million people, the labor force is 200 million people, the number of people employed is 185 million, and the working-age population is 170 million people. What is the unemployment rate?

		5 percent
		7.5 percent
		8.8 percent
		92.5 percent

1 points

QUESTION 1

Rosina Gonzales quit her job in Pennsylvania and moved to California to be close to her family. She is currently looking for work, so she would be considered

		frictionally unemployed.
		cyclically unemployed.
		a discouraged worker.
		seasonally unemployed.

1 points

QUESTION 2

Discouraged workers

		are counted as unemployed workers when the unemployment rate is calculated.
		would decrease the unemployment rate if they were added to the number of unemployed workers.
		are counted as one-half of a worker in the unemployment statistics.
		would increase unemployment rate if they were added to the number of unemployed workers.

1 points

QUESTION 3

In measuring the unemployment rate, part-time workers are ________ and discouraged workers are ________.

		included as employed; included as unemployed
		excluded; excluded
		excluded; included as unemployed
		included as employed; excluded

1 points

QUESTION 4

Mary has decided that the she does not like Iowa and has decided to quit her job as a medical technician and move to Arizona. Mary's unemployment as she searches for a new job is best classified as

		frictional.
		cyclical.
		structural.
		seasonal.

1 points

QUESTION 5

When a golf caddy in Minnesota (where golf courses close in the winter) is unemployed in December, it is most likely the case that the golf caddy is

		cyclically unemployed during long droughts.
		frictionally unemployed during spring and summer.
		structurally unemployed during spring and summer.
		seasonally unemployed.

1 points

QUESTION 6

		part of the labor force and employed.
		part of the labor force and unemployed.
		a discouraged worker.
		not part of the labor force.

1 points

QUESTION 7

The working-age population includes

		youngsters between the ages of 14 and 16 if they are working at least part time.
		only employed people over the age of 16.
		those in jails and hospitals.
		employed and unemployed people over the age of 16.

1 points

QUESTION 8

Involuntary part-time workers are workers who

		work less than 35 hours but would like to work full time.
		work more than 35 hours but would like to work less than 35 hours.
		work less than 35 hours by choice.
		work have lost their jobs within the last four weeks and are seeking another job.

1 points

QUESTION 9

Frictional unemployment is the result of

		the normal process of jobs being created and destroyed.
		an economic recession.
		people not getting along (having friction) with their employers.
		the economic decline of major industries

1 points

QUESTION 10

Bill just graduated with his degree in economics. Through Career Services he submitted his resume to several companies and he will visit them during the next two weeks. Bill is considered

		not in the labor force.
		cyclically unemployed.
		frictionally unemployed.
		structurally unemployed.

1 points

QUESTION 11

Harry works at the video rental store for 20 hours per week. He's asked his boss to allow him to work 40 hours per week, but has been told that business is too slow. Harry is considered

		an involuntary part-time worker.
		a marginally attached worker.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 12

Discouraged workers who are over 16 years old are

i.not counted as unemployed.

ii.part of the working-age population.

iii.part of the labor force.

		i and ii
		ii and iii
		ii only
		i only

1 points

QUESTION 13

Higher unemployment benefits create

		higher seasonal unemployment as workers switch jobs.
		a lower number of job leavers.
		incentives for longer job searches and higher frictional unemployment.
		incentives for shorter job searches and higher structural unemployment.

1 points

QUESTION 14

Seasonal unemployment includes people who become unemployed from

		changes in the business cycle.
		technological changes.
		the seasonal weather patterns.
		normal changes in the labor force.

1 points

QUESTION 15

Cyclical unemployment is

		higher when the economy is expanding.
		always greater than the total of structural and frictional unemployment.
		the total of structural and frictional unemployment.
		created by a recession.

1 points

QUESTION 16

Which of the following people would be classified as employed in the Current Population Survey?

		April, who just graduated from college and is looking for work
		Jason, who was laid off from work less than 6 months ago but who has stopped looking for work
		Rich, who is working 20 hours a week but wants a full-time job
		Misty, who just quit her job to return full time to school

1 points

QUESTION 17

People who are willing and able to work but are not looking for work because they have been discouraged by their previous futile efforts are called

		discouraged workers.
		involuntarily unemployed.
		part-time lookers.
		unemployed workers.

1 points

QUESTION 18

Discouraged workers are included in the calculation of the

i.unemployment rate.

ii.labor force participation rate.

iii.working-age population.

		i and ii
		i only
		iii only
		ii only

1 points

QUESTION 19

As firms search for the best employee to fill an opening and the unemployed search for the job that best fits their skills, the economy experiences

		changes in the business cycle.
		cyclical unemployment.
		frictional unemployment.
		structural unemployment.

1 points

QUESTION 20

Suppose the U.S. population is 275 million. If 210 million people are of working age, 135 million are employed, and 6 million are unemployed, what is the labor force participation rate?

		64 percent
		67 percent
		76 percent
		49 percent

1 points

QUESTION 21

During a recession the unemployment rate generally ________ and during an expansion the unemployment rate generally ________.

		rises; rises
		rises; does not change
		falls; rises
		rises; falls

1 points

QUESTION 22

		56 percent
		69 percent
		78 percent
		67 percent

1 points

QUESTION 23

If Brian, age 24, had no job but was available for work and had looked for a job the week before the survey, Brian is classified in the Current Population Survey as

		unemployed.
		employed.
		a discouraged worker.
		not in the labor force.

1 points

QUESTION 24

Julie works part-time for economic reasons. She would be considered

		an involuntary part-time worker.
		not in the labor force.
		a job seeker.
		a discouraged worker.

1 points

QUESTION 25

		5 percent
		7.5 percent
		8.8 percent
		92.5 percent

1 points

This question tests your knowledge of what activities are includedin calculating GDP. Decide for each item whether it is part of GDPand, if so, to which expenditure category it belongs.

2. Purchase of 100 shares of General Motors stock:

A. Not counted in GDP

B. Counted as part of consumption

C. Counted as part of investment

D. Counted as part of government

E. Counted as part of net exports

3. Consider the following three individuals.

Julie did not work for pay last week, but she met with a jobcounselor and went on two job interviews.

Jack was laid off from his job at a furniture store six months ago.He has a family to support and is frustrated with his inability tofind a full-time position. Last week he took a part-time job at afast-food restaurant, but could work only three hours.

Patricia has been out of work for almost a year. She desperatelyneeds a job but has become so discouraged that she has given up onher job search.

Which of these people would be considered unemployed by the Bureauof Labor Statistics (BLS)?

A. Julie

B. Jack

C. Patricia

D. Julie and Jack

E. Julie and Patricia

F. Jack and Patricia

G. All three individuals

H. None of the individuals

4. Which of the following individuals would NOT be consideredunemployed under the Bureau of Labor Statistics criteria?

A. An assembly-line worker for General Motors who is laid offbecause of a reduction in car sales.

B. An assembly-line worker for General Motors who quits her job andreturns to college on a full-time basis.

C. An assembly-line worker for General Motors who quits her job butis interviewing for a position as a part-time bank teller.

D. A recent high-school graduate who is seeking his first job as anassembly-line worker at General Motors.

This table shows employment data for the United States for December2002. The civilian unemployment rate, which is the most commonjobless statistic quoted in the press, only includes non-militaryand non-institutionalized adults 16 years of age and older. Allnumbers are in thousands of people.

Civilian Non-Institutional Population
(16 years of age and over) Employed Unemployed

214,968 133,952 8,590

Source: Economic Report of the President, 2003

5.1. What was the unemployment rate in December 2002? (Express youranswer to the nearest tenth of a percent.)

%
Please enter 1 digit after the decimal point.

This table shows employment data for the United States for December2002. The civilian unemployment rate, which is the most commonjobless statistic quoted in the press, only includes non-militaryand non-institutionalized adults 16 years of age and older. Allnumbers are in thousands of people.

Civilian Non-Institutional Population
(16 years of age and over) Employed Unemployed

214,968 133,952 8,590

Source: Economic Report of the President, 2003

5.2. What was the labor force participation rate in December 2002?(Express your answer to the nearest tenth of a percent.)

%
Please enter 1 digit after the decimal point.

6. The Consumer Price Index measures:

A. The cost of all goods and services produced within a country'sborders

B. The cost of goods and services consumed by a typicalhousehold

C. The change in income received by a typical household

D. The cost of keeping a family above the poverty line

7. Which of the following is NOT a characteristic of discouragedworkers?

A. They want a job.

B. They are not currently working.

C. They are counted as unemployed by the government.

8. If gross investment is $50 billion and depreciation is $20billion, the economy's capital stock rises by:

A. $70 billion

B. $50 billion

C. $30 billion

D. $20 billion

9. The table shows the distribution of total expenditure on the CPImarket basket across several broad categories.
Category of Goods and Services Percent of
Market Basket

Apparel 4%
Education and Communication 6%
Food and Beverages
16%
Housing 41%
Medical Care 6%
Other Goods and Services 4%
Recreation 6%
Transportation 17%

Source: Bureau of Labor Statistics
Which of the following will have the biggest impact on theCPI?

A. A 4% increase in the cost of apparel

B. A 4% increase in the cost of medical care

C. A 4% decrease in the cost of recreation

D. A 4% increase in the cost of food and beverages

. Which of the following activities would be included in thecalculation of GDP for the United States?

A. Texas Instruments produces computer chips at a manufacturingfacility in Indonesia.

B. I chop down a cherry tree on my property and make a dining roomtable. I saw a similar table sell for $800 in a local furniturestore.

C. Honda, a leading Japanese automobile company, produces 25,000Accords at its Indiana plant and exports them back to Japan.

D. Goodyear Tire Company manufactures 250,000 tires. The tires areto be sold to General Motors, which will put them on newautomobiles.

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ECON 1012 Lecture Notes - Lecture 4: Real Wages, Output Gap, Unemployment Benefits

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